Kampala. Hours before the central bank sued businessman Sudhir Ruparelia and his Meera Investments Company seeking recovery in excess of Shs300b, a State House-cracked initiative to resolve the matter out of court had failed, this newspaper can reveal. Highly-placed sources said President Museveni convened and chaired a meeting on Thursday, last week, which set conditions for Mr Ruparelia, the former owner of the defunct Crane Bank, to fulfil if he wanted to prevent litigation.
Bank of Uganda Governor (Bou) Emmanuel Tumusiime Mutebile and Attorney General William Byaruhanga are said to have attended the meeting, although neither official was available to confirm the discussions.
The meeting reportedly resolved that the businessman pay the money sought by the central bank and, as commitment, make a down payment of $18m (Shs65b) to dissuade Bank of Uganda from filing the case.
Mr Ruparelia, according to sources who spoke on condition of anonymity due to sensitivity of the matter, agreed to the terms but demanded that unnamed BoU officials responsible for Crane Bank’s supervision until 2015 be held liable over the infractions unearthed by the auditors.
He reportedly also raised concern that some of the lawyers involved in the case had a direct conflict of interest.
“I am not aware of that meeting and, therefore, can’t comment,” Mr Don Wanyama, the senior presidential press secretary, said last night.
Sources indicate that Mr Ruparelia made a passionate appeal to stay the legal action on the back of months of BoU-authorised forensic audit after the latter took over management of Crane Bank on the basis that it posed “systematic risk” to Uganda’s entire financial sector.
Mr Ruparelia said he would not comment on the matter until he files his defence.
Crane Bank was the most successful indigenous bank, and the third largest commercial bank in the country, before it went into problems.
At least five sources with knowledge of the deliberations of the Thursday meeting separately confirmed the meeting and some of its resolutions, intimating that the matter went to court on June 30, only after Mr Ruparelia failed to make the Shs65b down payment.
He had reportedly argued that audits of his former bank that linked him to financial fraud should be revisited to question the role of officials of Bank of Uganda that, under the 2004 Financial Institutions Act, are required to supervise financial institutions, raise the red flag and take immediate corrective measures.
The central bank took over Crane Bank in October 2016 and placed it in receivership for being under-capitalised and in January, this year, sold some of its assets and liabilities to dfcu Bank.
BoU spokesperson Christine Alupo yesterday declined to discuss the matter, citing the sub-judice rule that bars third parties from discussing merits of a matter before court in a way that could influence the opinion of the presiding judicial officer.
In a separate statement, the bank noted that it had, using its powers as a receiver of the defunct Crane Bank and regulator of the financial sector, hired two law firms; MMAKS Advocates and Bowmans Uganda, to recover up to $93.8m or Shs338b and 48 freehold land titles from Mr Ruparelia, and his real estate arm, Meera Investments.
It denied reports that it had paid the lawyers it engaged, MMAKS Advocates and A.F. Mpanga Advocates, Shs12b to pursue the case.
“Court filing fees of Shs398.2m were assessed and paid to Uganda Revenue Authority. Other than that, there has been no payment of legal fees in connection with this suit. The BoU will settle any legal fees in accordance with the law governing remuneration of advocates,” the statement read in part.
There had been insinuations in sections of the media that BoU officials were likely exploiting the case against Mr Ruparelia to connive with the hired attorneys to enrich themselves through inflated lawyer fees.
“We wish to assure the public that any allegations that the suit is being brought by BoU and/or its lawyers for purposes other than the recovery of the funds and properties due to Crane Bank are false,” the central bank noted.
Its statement followed revelations that Kashillingi Rugaba & Associates, on behalf of a one Derrick Nsereko, acting as an “aggrieved Ugandan citizen”, has filed a notice of intention to counter-sue the central bank.
Mr Nsereko, relying on findings of a BoU-authorised forensic audit which, among other things, detailed alleged fraudulent transaction and illegal insider trading at Crane Bank by Mr Ruparelia before its 2016 closure, claims that the central bank officials either failed to exercise their mandate or colluded with the defunct bank’s management.
“He [Derrick Nsereko] is dissatisfied that BoU has availed information indicating the kind of things happening in Crane Bank under their watch. He believes that it didn’t happen overnight,” lawyer Kashillingi told this newspaper in an interview.
The Mr Ruparelia, family denies that it is behind the intended counter-suit.
Additional reporting by Mark Keith Muhumuza